International Perspectives on India • “India is now enjoying a rising status in the international arena…it has embarked on all round reforms and achieved rapid economic growth...China rejoices at the achievements made by India in its development.” Mr Zhu Rongji, President, People’s Republic of China on his visit to Mumbai in January, 2002
• “ You liberated your markets and now you have one of the 10 fastest growing economies in the world” - Bill Clinton
GENERAL FACTS •
LAND AREA: 3.29 MILLION SQUARE KILOMETERS
•
CAPITAL: NEW DELHI
•
GOVERNMENT: DEMOCRATIC, PARLIAMENTARY
•
POPULATION: APPROXIMATELY 1 BILLION (2001)
•
POPULATION GROWTH RATE: 2.14 PERCENT
•
POPULATION DENSITY: 324 PERSONS/KM2
•
LIFE EXPECTANCY: 62 YEARS, MALE; 64 YEARS, FEMALE
•
LITERACY RATE: 65.38 PERCENT
ECONOMIC PROFILE • GDP AT CURRENT PRICES: $400 BILLION (2000-01) • AVERAGE REAL GDP GROWTH: 5.2 PERCENT (2000-01) • INFLATION RATE MEASURED BY WPI: 6.6 PERCENT (19992000) • EXCHANGE RATE: Rs 45.51 / US$ (APRIL-JANUARY, 2001) • EXPORTS: US$ 44.1 BILLION (2000-2001) • IMPORTS: US$ 49.8 BILLION (2000-2001)
Why India?........ • 4th largest economy • 2nd largest GDP in emerging economies in PPP terms – Projected GDP growth rate for current year is about 8%
• Stable macro economic indicators – Abundant foreign exchange reserves of over USD 100 billion – Continued strong inflows of FDI of USD 2.3 billion – Strong growth rate in exports of 8% in April-November 2003 over last year – BoP Surplus & reduction in trade deficit in 2001-02
• Robust democratic federal system with rule of law • Growing middle class of over 300 million with significant purchasing power • Widespread use of English and large pool of skilled knowledge workers
The Interim Budget 200405 Significant incentives through duty & tariff cuts: • Reduction of peak tariff rates by 5%, to 20% • Elimination of the 4% special additional customs duty • Reduction of customs duties on equipment for projects from 25% to 10% • Inland Air Travel Tax of 15 per cent abolished • Customs duty on cellphones halved to 5 per cent. • Customs duty on power equipment cut by 15 per cent to 10 per cent. • Duty on life saving drugs and equipment cut to 5 per cent.
Emerging Investment Potentials • • • • •
Telecommunications Tourism Entertainment Food Processing Pharmaceuticals
The Telecom Sector • Highly dynamic industry with growth of 22% pa in fixed lines, and over 100% in cellular lines
The Tourism Industry • Second highest foreign exchange earner for the country. • Industry given export house status. • As a % GDP (5.6% of GDP), remains a small percentage indicating tremendous potential • Increased government emphasis to make tourism a greater revenue earner. Hence: – Foreign tourist arrivals of 2.7 million in 2003 and grew at 15% over the year before. Growth in domestic tourism by 22 per cent – Foreign exchange earning of USD 3.6 billion- an increase of 23% over last year.
The Tourism Industry Growth of Tourism Prospects ($ billion) 2001 2004 2007 CAGR 2001-07 (%) Domestic 20.1 37.0 69.6
23
Inbound
3.7
4.5
5.7
7.6
Outbound 2.6
3.8
4.5
9.7
Total
45
80
20.3
26
The Entertainment Industry • Indian entertainment industry recorded exponential growth in last decade to reach a turnover of $3.6 billion in 2002. It is expected to attain a turnover of USD 9.3 billion by 2007 growing at a CAGR of 20%.
The Entertainment Industry Growth in terms of revenue in USD billion
Television Films
2002 2.47 0.89
2007 6.49 2.07
CAGR 21% 19%
Music
0.23
0.36
9%
Radio
0.07
0.25
31%
Others
0.04
0.14
Total
3.69
9.31
20%
The Food Processing Industry ‘
Outside North America two of our largest and fastest growing businesses are in India and China….’ – PepsiCo's annual report, 1999
The Food Processing Industry
• Industry comprises a gamut of activity including agriculture, horticulture, plantation, animal husbandry and fisheries. • The industry is in its nascent stages with only 2% of food being processed as compared to around 60% in the US and UK. • Despite that, this industry – Is 5th in the country in size, representing 6.3% of GDP. – Accounts for 18% of India’s exports and – 6% of total industrial investment • The industry size is estimated at USD 70 billion • Total exports in 2000-01- approximately USD 3 billion with rice constituting the significant share of 20% and marine products of 45%
Drugs and Pharmaceuticals • 100% FDI permitted • Drugs have just been further decontrolled, boosting the industry • Joint R&D could result in pathbreaking results • India produces good quality drugs at low prices - rich potential for marketing tie-ups
Indian Pharma Industry • 4th largest in the world, based on volume • 8% of world’s production by volume and 1.5% by value • Production: Bulk: US$ 860 mn, Dosages US$ 3 bn. • Exports US$ 1.5 billion; growing at 15% p.a. • International Quality: 40 % of exports to developed countries • Implementation of IPR regime will provide immense business opportunities to Global Players
POTENTIAL OF THE INDIAN PHARMACEUTICAL INDUSTRY Trends in revenues earned by the Pharmaceutical Industry ($ billion) 1997
2001
2010
Domestic Market
2.7
4.0
10-12
Export Markets
1.2
2.0
6-7
Research, Developments & New Drug Discovery
-
5-6
Total
6.0
21-25
3.9
Investment Potential • Production of drugs like Penicillin and Ibuprofen for leading global companies • Contract research for European companies. Low cost of NDD • Compliance with international norms- SHE, ISO, WHO GMP, USFDA, etc. • World leader in anti TB drug • Development of cost effective processes
OTHER SECTORS • AGRICULTURE - FARMING EQUIPMENT - FERTILIZERS • MANUFACTURING - A GROWTH RATE OF 6.3% / YEAR BETWEEN 1992- 2000 • FINANCIAL SECTOR - BANKING - INSURANCE
OTHER SECTORS (Contd.) • SERVICE SECTOR – OTHER THAN INFORMATION TECHNOLOGY • INFRASTRUCTURE POWER GENERATION, TRANSMISSION AND DISTRIBUTION RAILWAYS ROADS SHIPPING AIRPARKS PORTS • OIL AND NATURAL GAS • MINING
OTHER SECTORS (Contd.)
• AUTO INDUSTRY - AUTOMOBILES FOR DOMESTIC AND FOREIGN MARKETS - AUTO PART • BUILDING MATERIAL • FURNITURE
OTHER SECTORS (Contd.) • INDUSTRIAL PRODUCTS • BIOTECHNOLOGY - PHARMACEUTICALS - ANIMAL HEALTHCARE - AGRICULTURE • BUSINESS OUTSOURCING - CONSULTING – TECHNICAL / NONTECHNICAL - RESEARCH - ENGINEERING SERVICES - TRANSCRIPTS – LEGAL, MEDICAL
OTHER SECTORS (Contd.) • CALL CENTERS • HEALTHCARE • RETAIL - DEPARTMENT STORES - SPECIALTY STORES - CONVENIENCE STORES - FRANCHISING
WHAT IS THE FEDERATION OF INDIAN CHAMBERS OF COMMERCE & INDUSTRY? • INDIA’S APEX BUSINESS ORGANIZATION • ESTABLISHED IN 1927 AT MAHATMA GANDHI’S ADVICE TO HELP THE INTERESTS OF INDIAN BUSINESS COMMUNITY • STARTED WITH 24 MEMBERS • NOW OVER 500 MEMBERS CONSISTING OF CHAMBERS OF COMMERCE, TRADE ASSOCIATIONS AND INDUSTRY BODIES • SPEAKS ON BEHALF OF OVER 25,000 BUSINESS UNITS EMPLOYING OVER 20 MILLION PEOPLE
WHAT IS THE FEDERATION OF INDIAN CHAMBERS OF COMMERCE & INDUSTRY? (Contd.) • PROVIDES INPUT TO POLICY ISSUES • PROVIDES INFORMATION ABOUT INDIA’S BUSINESS • PROVIDES COORDINATION BETWEEN FOREIGN AND INDIAN BUSINESSES AND GOVERNMENTS
THANK YOU